The court found that the policy's anti-sequential clause barred coverage for damage caused by Hurricane Sandy. Estate of Doerfler v. Fed. Ins. Co., 2020 N.J. Sup. Unpub. LEXIS 920 (May 14, 2020).
The insureds held identical homeowners policies from Chubb and Federal Insurance Company. Damage resulting from flood was not covered. The policies' "surface water exclusion" stated,
[W]e do not cover any loss caused by: flood, surface water, waves, tidal water, overflow of water from a body of water . . . or spray from any of these even if driven by wind.
The insureds also had separate flood insurance policies, insuring the structure of each home for $250,000.
Superstorm Sandy created wind gusts as high as eighty miles per hour. A severe storm surge caused tides to rise between nine and eleven feet. The storm surge caused surface water to flood onto plaintiffs' properties and their homes ultimately collapsed.
Claims were submitted to the insurers. Inspectors determined that the damage to the homes was cased by storm surge and flood waters, not wind. Plaintiffs were paid the maximum amounts under the flood policies.
Plaintiffs sued the insurers and cross-motions for summary judgment were filed on whether the surface water exclusion barred coverage after the homes were destroyed in the flood that inundated their properties.
The trial judge correctly found that the policies did not cover the losses sustained in the flood. The surface water exclusion clearly applied.
The trial judge correctly rejected plaintiffs' contention that wind was the initiating and efficient proximate cause of the storm surge and, because wind damage was covered under their policies, the surface water exclusions did not apply. Under the efficient proximate cause rule, recovery was allowed where the insured risk was the last step in the chain of causation set in motion by an uninsured peril, or where the insured risk itself set into operation a chain of causation in which the last step may have been an excepted risk.
As determined by the trial judge, the efficient proximate cause rule did not apply here. Wind and flood waters were not separate events. Further, there were no sequential causes of loss. Because the policies excluded any loss contributed to, made worse by, or in any way resulting from or caused by flood, surface water, waves, tidal water, or overflow from a body of water (an anti-sequential clause), the claims were barred regardless of whether wind played any role in the loss.
Accordingly, the trial court properly granted summary judgment to the insurers.
